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OJSC Russian Railways envisages an allocation of some 104 billion roubles for the
purchase of rolling stock in its 2018 investment programme.

The Company needs products whose reliability is not only not inferior, but also
superior to world analogues. This is the most important condition for fulfilling the
strategic tasks facing Russian Railways, namely increasing passenger and freight traffic,
increasing speeds and developing heavy haul, high tonnage traffic and regional railways.

Oleg Belozerov, CEO and Chairman of the Board of OJSC Russian Railways, announced
this during an address to a general meeting of the non-profit partnership the Association
of Railway Machinery Manufacturers (NP "OPZhT") in Moscow on 16 February 2016.

According to Belozerov, the balance between production and purchases is critical
for the Company.

"We would like to understand clearly what capacities, volumes and on what terms
we can count on. It is absolutely necessary to coordinate exactly our actions with
you when planning our purchases and production tasks. At the same time, we need a
price for products that will make our services competitive," said the head of OJSC
Russian Railways.

Belozerov noted that with regard to the acquisition of new railway products, Russian
Railways is oriented towards domestic Russian producers, many of which have concluded
long-term agreements with the Company, which in turn contributes to the maintenance
of production volumes and the development of products with improved features and characteristics.

However, Oleg Belozerov also said that the products supplied do not always meet
the Company's requirements, so as a carrier, Russian Railways incurs significant costs
related to equipment failures.

"We will therefore strengthen the follow-up with regard to quality complaints and
claim settlements, including through automatisation. Manufacturers will be able to
avoid economic sanctions only by improving the quality. This means that you need to
consider carefully the problems of production along the entire technology chain and
pay special attention to quality control both in the main production and at your subcontractors,"
said the head of OJSC Russian Railways when addressing the representatives of enterprises
producing railway equipment.

He also recommended that the partnership should consider the issues of insuring
manufacturers against liability for product failures in operation, increasing the
warranty period, and tightening up the work with claims and settlements.

"It is important for the railway industry to accelerate the transition to new international
standards. Producers should pay special attention to the certification of suppliers
and thus spread new demands throughout the entire production chain," said Oleg Belozerov.

In addition to ensuring the quality of products, another important objective of
the partnership is to assist actively the processes involved in import substitution
and deepen the localisation of production.

The CEO of OJSC Russian Railways also reminded his audience that the Company set
up the in-house programme "Digital Railways" in order to provide for the creation
of end-to-end digital technologies for organising transportation.

"In the coming decades, we will see the transformation of the entire technical
landscape of the railways, which will radically change our ideas about ​​the content
of the work we will do as railway employees. We are on the verge of introducing self-learning
smart systems based on artificial intelligence (AI) algorithms," said Oleg Belozerov.

According to Belozerov, an important role in the provision of quality services
will be played by the life cycle of energy-efficient rolling stock which is optimised
in terms of capacity and cost. At the same time, it is important at the design stage
to proceed from the concepts of "smart locomotive" and "smart train" and put in place,
in particular, technologies such as "automatic train drivers" for certain stretches
and tasks.

Speaking about the prospects for the development of the Association of Railway
Machinery Manufacturers, Oleg Belozerov suggested creating a special area on the partnership
site for the introduction and use of breakthrough technologies and technical solutions
in the field of railway transport.